Klimowicz v. Deutsche Bank National Trust Company

JEANNE M. KLIMOWICZ, Plaintiff,v.DEUTSCHE BANK NATIONAL TRUST COMPANY AS INDENTURE TRUSTEE FOR NEW CENTURY HOME EQUITY LOAN TRUST 2005-1, and CARRINGTON MORTGAGE SERVICES, LLC, Defendant.

MEMORANDUM OF DECISION AND ORDER

TIMOTHY S. HILLMAN DISTRICT JUDGE

Background

Plaintiff,
Jeanne M. Klimowicz (“Plaintiff”) has filed suit
against Deutsche Bank National Trust Company as Indenture
Trustee For New Century Home Equity Loan Trust 2005-1
(“Deutsche Bank”), and Carrington Mortgage
Services, LLC (“Carrington”) alleging claims for
wrongful foreclosure, violation of the Massachusetts Consumer
Protection Act, Mass.Gen.L. ch. 93A, breach of the covenant
of good faith and fair dealing and negligent infliction of
emotional distress. More specifically, Plaintiff asserts that
“Deutsche Bank wrongfully acquired title to the
mortgage of the subject property through a pattern of
intentional fraudulent conduct[, i.e.] the
[a]ssignment of a mortgage from a company no longer in
existence, to a mortgage [t]rust that had closed to new
mortgages years before the [a]ssignment.”
Complaint, at ¶42. Among the relief sought by
the Plaintiff is that this Court vacate and set aside the
Final Judgment of Foreclosure which was entered by the
Massachusetts Land Court on the grounds that the judgment was
obtained by fraud and because, under the circumstances,
vacating the judgment is appropriate to accomplish the ends
of justice. Plaintiff seeks this relief in accordance with
Massachusetts state law, Mass. R.Civ. P. 60(b). Plaintiff
also seeks the entry of an injunction prohibiting any further
post-foreclosure proceedings by any party, the entry of an
injunction prohibiting any further post-foreclosure
proceedings including any eviction or other proceedings
related to the property by the Massachusetts Housing Court or
any other court which would command any action on the part of
the Plaintiff. Lastly, Plaintiff seeks to be fully reimbursed
for the cost of her home and other compensatory and punitive
damages.

On June
23, 2016, this Court entered an Order denying Plaintiff's
request for a TRO after finding that she had failed to
establish a likelihood of success on the merits. See
Order on Motion for TRO (Docket No. 13). This Order
addresses Defendants' motion to dismiss Klimowicz's
Complaint for failure to state a claim. See Defendants
Deutsche Bank National Trust Company As Indenture Trustee for
New Century Home Equity Loan Trust, 2005-1, And Carrington
Mortgage Services, LLCs' Motion To Dismiss
Plaintiff's Complaint (Docket No.
15)(“Motion to Dismiss”). More
specifically, Defendants assert that the claims are barred by
the doctrines of res judicata, judicial estoppel and/or that
she voluntarily surrendered the property as part of the
Bankruptcy (as hereafter defined). For the reasons set forth
below, the Motion to Dismiss is granted.

Standard
Of Review

On a
Rule 12(b)(6) motion to dismiss, the Court “must assume
the truth of all well-plead[ed] facts and give plaintiff the
benefit of all reasonable inferences therefrom.”
Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d
1, 5 (1st Cir. 2007) (citing Rogan v.
Menino, 175 F.3d 75, 77 (1st Cir. 1999)). To
survive a motion to dismiss, the plaintiff must state a claim
that is plausible on its face. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955 (2007). That
is, “[f]actual allegations must be enough to raise a
right to relief above the speculative level, ... on the
assumption that all the allegations in the complaint are true
(even if doubtful in fact).” Id. at 555
(internal citations omitted). “The plausibility
standard is not akin to a ‘probability requirement,
' but it asks for more than a sheer possibility that a
defendant has acted unlawfully.” Ashcroft v.
Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937 (2009) (quoting
Twombly, 550 U.S. at 556). Dismissal is appropriate
if plaintiff's well-pleaded facts do not “possess
enough heft to show that plaintiff is entitled to
relief.” Ruiz Rivera v. Pfizer Pharm., LLC,
521 F.3d 76, 84 (1st Cir. 2008) (internal
quotations and original alterations omitted). “The
relevant inquiry focuses on the reasonableness of the
inference of liability that the plaintiff is asking the court
to draw from the facts alleged in the complaint.”
Ocasio-Hernàndez v. Fortuño-Burset,640 F.3d 1, 13 (1st Cir. 2011).

Facts

The
Mortgage and its Assignment To Deutsche

Deutsche
Bank acquired title to 32 Mary Heights, Fitchburg,
Massachusetts (the “Property”), as the high
bidder at the foreclosure sale of the Property. Klimowicz is
the former owner of the Property. On December 23, 2004, she
had granted a mortgage to the Property to New Century
Mortgage Company (“New Century”) to secure her
obligations under a promissory note in the amount of $297,
500. The mortgage was recorded in the Worcester County
Registry of Deeds (Northern District), on or about January 3,
2005 (the “Mortgage”)[1].

New
Century filed for bankruptcy in the Delaware Bankruptcy Court
on April 2, 2007. Later, on August 1, 2008, the corporation
was liquidated and its assets were transferred to New Century
Liquidating Trust. On August 7, 2008, New Century-- despite
its earlier dissolution--executed a purported assignment of
mortgage to Deutsche Bank National Trust, as trustee of an
investment loan trust-New Century Home Equity Loan Trust
2005-1. The assignment of mortgage was recorded on August 18,
2008, at the Worcester County Registry of Deeds (Northern
District) (“Assignment”). The Assignment states
it was prepared by Carrington Mortgage Services, LLC
(“Carrington”), which is listed as the
attorney-in-fact for New Century.

The
Assignment was signed by Dave S. Gordon, who is identified
as, “President of Carrington Mortgage Services,
LLC.” With permission of the Delaware Bankruptcy Court
granted on May 23, 2007, Carrington purchased servicing
rights from New Century. The appointment of Carrington as
Attorney-in-fact for New Century is dated June 18, 2007, and
recorded in the North Worcester Registry of Deeds.
Additionally, the appointment of Carrington as
Attorney-in-fact for Deutsche Bank is dated April 26, 2011.
Consequently, Carrington is- with regard to relevant times in
the case at hand-both the Attorney-in-fact for the Assignor
(New Century), and Attorney-in-fact for the Assignee
(Deutsche Bank).

The
investment trust (“Trust”) to which the Mortgage
was purportedly assigned on August 7, 2008, had a closing
date-- the date by which all loans and mortgages must have
been transferred into the investment pool-- of February 25,
2005. The Trust is governed by a Pooling and Servicing
Agreement. “(PSA”). By the terms of the PSA, the
parties agree to be governed by the laws of New York:
“This Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.”

Foreclosure
Proceedings

In or
about May 24, 2006, Klimowicz filed for protection under the
United States Bankruptcy Code, docket number 06-40851 (the
“Bankruptcy”). The case was converted to a case
under Chapter 7, of the Bankruptcy Code on May 25, 2007. As
part of the Bankruptcy, Klimowicz commenced Adversary
Proceeding number07-04093, challenging the validity of the
underlying mortgage, (the “Adversary
Proceeding”). The Adversary Proceeding was dismissed
due to her failure to properly serve New Century Mortgage
Company. During the Bankruptcy, and prior to the conversion
to a case under Chapter 7, New Century Mortgage Company filed
a motion for relief from the automatic stay, in order to
begin foreclosure proceeding. Klimowicz entered into a
stipulation ...

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